Underexplained and poorly understood, the concept of Real Estate as a service needs much clarification. That is exactly the aim of this blog: to introduce you to what Space as a Service means, how it gives way to Real Estate as a Service, why this concept works, and how your business can adapt to it in the time to come.
REaaS, or Real Estate as a Service, is a new business model inspired by the broader trend of Space as a Service. Sometimes these worlds are confused or even used interchangeably.
The difference between them is simple: Space as a Service is the concept, while Real Estate as a service is its application. SpaaS became a popular term following the understanding of the last decade’s innovations in real estate. As a whole, these were all a service-based model instead of a product.
Space, or by extension Real Estate, has come to be marketed as a service rather than a commodity. What does that mean? The consumer is buying an experience associated with a space, and not merely the space.
Born out of the commercial rental industry in some measures, SpaaS has impacted every asset class within real estate already. Coworking spaces were perhaps the very beginning as they came up about a decade ago. However, now communal living is a fairly common example with its many unique business models, and it is doing far better in some geographies.
The SpaaS business model is especially profitable for the hospitality industry which now houses travellers and not tourists. As adventurers set out to explore lands at their own pace, recognizing cultural emblems like food, traditions, and society, their accommodation needs evolve to give them enough room to do this safely and comfortably.
The broader picture is the changed mindset of the consumer that needs space, no more as a product where they can sleep or eat or work. They now look for a service which is packed with comfortable amenities, tech-charged solutions on the go, and ease of adaptability.
This change reflects in the way real estate marketing works, no more selling spaces by the size but by the associated benefits and ease of living they offer.
Consumers don’t care for the lingo, the industry or its facets, or how the SpaaS revenue model works. Somehow, REaaS appeals to them emotionally. It offers comforts of the modern-day, all-inclusive in one price, taking away the hassles of arranging all that they require on a day to day basis.
With no questions on their lifestyle, it gives them more freedom to live the way they like. This system is tailored to their liking anyway. Like we explored in The Ideal Workspace report 2019, the consumer of today is looking for convenience and is willing to compromise on space for it.
The world moving out and about right now is living a fast-paced life with few commitments and more time for exploration. As a generation, their goals have evolved to not buy property at the first place they like the look and feel of, but try it out, or maybe just stick around until they find something more enjoyable that speaks to them on a deeper level.
SpaaS to them is a service of innovation: they want the best for themselves and they want it right now, as if it were a pair of Nikes. So it is obvious that as an industry, we will evolve to cater to their needs.
We as an industry are no more sellers. We are not selling spaces, or even just renting them out. We are now service providers who cater to the nature of services our clients want most.
This shift is important for our industry ideologically. Previous real estate business models are in line to go obsolete. If you refuse to change your business model, those who do change it will reap the benefits and take over your market share.
That said, the negative impact of what this new Real Estate as a Service business model is hard to understand. We recently fought a pandemic as a global community, and as a result social and physical distancing jeopardised niche asset classes within the business.
Who bears the brunt of an economic downturn? What happens if a business crashes? How do we evolve as much needed regulations are put into place? These raging questions still await answers.
However, the bottom line remains that this is the most preferred form of renting spaces for tenants even if providers are unclear on how to resolve issues. Our best advice in this case? Be the torchbearer and set a benchmark for your brand while the time is ripe to be the pioneer.
As always, we expect new businesses led by visionaries to sweep in to address the pain points of the industry, but the trust that comes with a pre-existing brand pivoting to provide better value to its customers is unique.
To adopt this business model, leaders need much research and analysis. It is imperative to list the many things that could go wrong with this initiative given the present nature of business. These need to be worked on, and back-ups need to be in place.
When you decide to take this leap, you will need to address many concerns: how do you raise funding for such a unique and fresh idea? And how do you introduce your customers to technological advancements within your operations so you can keep them for as long as possible?
Further, how to even make this transition realistically? What would it mean for you to streamline your operations as you delve into facility management within the REaaS model? And if you’re a real estate developer or a homeowner renting property, how can you make this shift in the first place?
All of these questions, and many more, will be answered by our experts from around the world at The Monk Realty Summit. Save the date, and send in questions and queries so we can make sure you get the answers you want from leaders from around the world.
Check out ‘The Monk Realty Summit 2020: Ready, Set, REaaS!’ and register to start receiving REaaS-focused, expert-curated resources right away to supercharge your business before the rest of the industry does.